Here are some tips on, yes, mortgages

As you eye refinancing or first-time home buying here is some
advice from the experts on new mortgage features to watch (and
watch out) for.

Reverse mortgages. This instrument sounds new but is simply
another version of borrowing against your home's equity, and I
would think long and hard before signing these papers. The loan
requires no repayment as long as you are alive, but of course you
lose the house. In certain cases, though, this might be worth
considering. Single-purpose reverse mortgages are provided by state
agencies for property tax deferral, for example.

Fannie Mae has a 'Homekeeper' program which acts as a credit
line And if you are facing retirement (and have no heirs who could
use a house), a reverse mortgage could give you a financing option
which drains the value from your home so that you die broke. You
can also use the reverse mortgage to buy an annuity.

You can accept the cash -- remember, this is the same money
you've been putting into the home as you have paid the mortgage up
until now -- as an annuity, in a lump sum. Federally insured home
equity conversion mortgages have the lowest rates and smaller
advance amounts. As always, shop around! Check rates with at least
five different lenders. The best advice may be the one your
grandfather gave you: Neither a lender nor borrower be.

Zero-Down Mortgages. Fannie Mae and Freddie Mac have been taking
the down-payment requirements lower and lower, until recently both
agencies removed it altogether from certain loan products. You
still have to pay closing costs, of course, but if you have very
good credit you can borrow the entire purchase price. A credit
rating called a FICO scale, developed by a firm called Fair, Isaac
& Co. runs from 300 to 900, and good-credit rating starts
around 600. A rule of thumb lenders sometimes look for is a
debt-income ratio no higher than 41 percent.

The national rate of home ownership has risen to more than 65
percent as first-time home buyers who could not afford the
traditional 20 percent down payment have entered the market as
mortgages became available with as little as 5 percent down. Now,
it's zero. The opportunity to use that cash comes at a cost, of
course, in the form of higher mortgage insurance fees (in addition
to interest charges and principal payments).

You receive a letter notifying you of the change, which usually
has little to do with you, and you may now be mailing the monthly
check across the country.

But the transfer of service may work to your benefit. Your new
lender may be able to offer you a wider range of services and loan
products. Make sure you keep all your records so the transfer does
not alter the terms of your original loan. Scrutinize the "Hello"
letter from the new lender to make sure that taxes and insurance
payments remain constant.

Tom Durwood is a frequent contributor to the North County Times.
He can be reached by e-mail: firstrunmk@aol.com.